CHAPTER 1

INTRODUCTION

Background of the Study

In early January 2020, a new coronavirus was identified in Wuhan, the People’s Republic

of China. This virus was officially named Coronavirus Disease-2019 (COVID-19) by WHO on

February 11, 2020. The virus spread and the number of Covid-19 cases were increasing day

after day globally. On March 11, 2020, WHO declared COVID-19 as a pandemic. The pandemic

brought a toll on the global economy. The economic activity was affected in many ways in

different outbreak-affected countries. Production, supply, and financial markets globally have

been significantly affected by the pandemic. It prompted governments to devise contingency and

response plans to keep their economies afloat. Various sectors globally are not invincible against

the collapse of the stock market (Fernandes et al., 2020). This resulted in a significant decrease

in numerous markets worldwide.

Asia’s economic growth, except its high-income industrialized economies, was expected

to drop from 5.7% to 2.4% in the year 2020 (Asian Development Outlook Supplement, 2020).

COVID-19 pandemic created uncertainty risks to struggling countries, especially the Philippines.

These, inevitably, resulted in a slow in the country’s GDP growth. The year 2020 saw a deep

recession in the Philippines economy. It showed figures of 9.6% of contraction of the GDP year

after year. This is considered the worst annual decline of the Philippines economy since the

National Accounts data series commenced in 1946 (Rajiv Biswas, 2021).

 Following the sanitation and social distancing protocols, a surge of medical supplies was

demanded. Enhanced Community Quarantines (ECQs) were implemented widely in the hopes of

containing the COVID-19 cases in the nation. This is followed by banning of sea, land, and air

transportations. Consequently, work from home setups was advised by the government. The

continued health-advised regulations and government policies created changes in the business

landscape and particularly impacted the significant industries in the Philippines. The notable

difference is the online shift that drove the whole business industry.

Due to lockdowns, consumers shifted to online shopping. From their groceries, daily

essentials, snacks, etc., purchases were made through a tap on mobile. The Philippines adapted to

the digital shift in the market. Businesses have been using social media as one of their primary

channels of online branding. One of the critical issues they face today is effective marketing

strategies, especially now that almost everyone is shifting online. More consumers have come to

prefer Internet sales to over-the-counter sales, and the e-commerce market for individuals is

expanding. However, SMEs have been unable to sufficiently utilize such opportunities (Yoshino

& Taghizadeh-Hesary, 2016). Unfortunately, there are still enterprises left behind or struggling to

keep up with the challenges and changes posed by the pandemic.

Small and medium-sized enterprises (SMEs), which comprise almost 90% of the

businesses in the Asia Pacific countries, are hit badly by the COVID-19 pandemic (UNDRR

Asia-Pacific,2020). SMEs, as defined by the European Union, are enterprises with fewer than

250 employees.

SMEs in the Philippines play a significant value in the country’s economy. Employing

62.66% of the country’s total employment in the year 2020 (DTI), this sector is one of the drivers
of the Philippines' economic growth. Of 957,620 business enterprises operating in the country,

952,969 (99.51%) are MSMEs based on the 2020 List of Establishments of the Philippine

Statistics Authority (PSA).

Even before the pandemic, SMEs are already vulnerable in the business environment.

Their limited access to finance and market information ensues their shortcoming in the

technological and development functions (Flamiano et al., 2021). Due to the restrictive business

environment and challenges regarding vital internal factors, the micro, small and medium-sized

enterprises struggle to develop and introduce growth within themselves (AIM RSN PCC SME

Survey, 2018). Competing with larger enterprises emphasizes SMEs characteristic of “the

liability of smallness” as Freeman, Carroll, and Hannan (1983). These conditions are now pushed

heavier with the changes in the economy brought by the pandemic.

COVID-19 has affected not only the country’s health system but also the economy. SMEs

are not exempted from this global financial turmoil. And as the pandemic lingers, small and

medium-sized enterprises are pushed to a tightrope. These small businesses mainly rely on the

foot traffic of in-person customers to keep their businesses afloat. Not being able to open their

doors to the public completely cuts off their financial resources, resulting in permanent or

temporary closures of their businesses (Itliong, 2020). Healthcare protocols and quarantine

restrictions around the country have muted consumer and business activity and confidence. The

COVID-19 response of the government on setting the economies on freeze has a countereffect on

the economy. The Philippines household consumption declined by 15.3% in Q2 (Asian

Development Outlook Supplement, 2020). SMEs now struggle to keep their businesses afloat as

they face a drastic decrease in their sales, demand, and, therefore, revenue.
 On research conducted by Flaminiano et al. (2021), almost 63 percent of the MSMEs

surveyed reported that their operations had never been affected by disasters in the past before

COVID-19, implying that the pandemic may have been the first and most tremendous negative

shock to their operations that many small businesses have experienced. SMEs face difficulty

with many ceasing to operate due to increased costs, and cash reserves are depleting. During the

COVID-19 pandemic, SMEs are already facing layoffs and closures in business, attrition of

employees, weak growth of small businesses, and several other problems (Kumar et al., 2021).

Most consumers are losing their jobs or are facing salary cuts, which decreases their purchasing

power. This, in effect, creates a ripple effect in the market as the demand for products and

services declines.

While all businesses languish when they experience a decrease in demand for their

products and services, in addition to financing constraints, small businesses suffer worse than

large firms because of their smaller size and smaller clientele (Bourletidis & Triantafyllopoulos,

2014; de la Torre et al., 2010; Flaminiano et al.,2021; OECD, 2009; Nugent & Yhee, 2002; Piette

& Zachary, 2015). Others have managed to keep their business running at a limited capacity.

However, there are still those that are left behind. Those who led and continued to operate took

advantage of technological and online resources and incorporated innovative strategies to their

advantage. The shift in the market environment brought by the pandemic encourages enterprises

to adopt digital technology and online marketing strategies on a broader scale.

It is believed that digital technology enables firms to transform business models quickly

and not in traditional or linear ways. Digital transformation is defined as the initiative of firms to

use new capabilities by leveraging digital technologies to transform organizational strategies and

operations (Priyono et al., 2020; see also Li, 2018; Warner & Wäger, 2019). The transformation
of the business model, supported by digital technology, has been documented in the literature as

one of the strategies used to respond to disruptive environmental changes; in particular,

technologies that support firms in the identification of new business practices (Richter, 2020).

However, small and medium-sized enterprises have not completely maximized the opportunity in

mitigating business curbs.

It is evident that SMEs understand the importance of branding but do not fully implement

it as it does not flow through all their marketing activities, and branding is not seen as essential

in running the business (Cant et al., 2013). The non-use of information technology has not only

damaged SME sales but also made many SMEs unfamiliar with the ongoing support available

(Yoshino & Taghizadeh-Hesary, 2016). To sustain a competitive advantage and increase revenue

and communication, small retail business leaders must plan to satisfy customer requirements and

ensure innovative technological strategies are implemented (Cheng & Liu, 2017). Online

branding comes into play as the internet has become an essential tool in sales and marketing

communications.

While online branding or e-branding, digital branding, or internet branding has received

relatively little attention in academic literature, J. Rowley (2009) defines an online brand as: “a

brand that has an online presence” and adapt Chaffey’s (2008) definition of online branding to

propose that online branding is: How online channels are used to support brands, which in

essence are the sum of the characteristics of a product, service or organization as perceived and

experienced by a user, customer or other stakeholders.

SMEs that incorporate internet activity with their marketing operations know the

advantage of online branding and its reach. However, with information asymmetry, they haven’t
utilized it effectively. SMEs’ lack of information infrastructure exacerbates the information

asymmetry problem (Yoshino & Taghizadeh-Hesary, 2016). Due to their nature, SMEs may find

it difficult to build a reputable brand name that consumers acknowledge and trust. SMEs focus

mainly on the day-to-running of the business, with little time spent on branding issues as it is not

perceived to be relevant or necessary for SMEs (Cant et al., 2013). The simplest yet one of the

most important benefits of online branding is to spread the brand’s word to audiences in the

comfort of their homes and private surroundings (Aman, 2014). With online branding SMEs and

increasing social media and online resonance, this can decrease customer turnover and establish

brand loyalty. Thus, for this matter, this study will explore how online branding can be a strategic

initiative for SMEs in Tacloban City during the pandemic concerning revenue generation. Our

study will also determine marketing strategies for online branding to the SMEs of Tacloban City.

Hit by the Covid-19 slump followed by social distancing and a nationwide lockdown,

businesses are experiencing major impacts no matter how established they are and are having to

re-look at how they manage and operate their business, including re-visitation of their business

plan. It has become challenging for most businesses to keep their financial wheels turning during

the lockdown period due to less revenue churn and the general uncertainty in the global financial

environment. () Unfortunately, the impact on startups or small businesses can be way more brutal

as they have scarcer cash reserves and a smaller margin for managing sudden slumps. The ripple

effect of this shutdown will have a key impact on the economy, as all business sectors get

affected, resulting in low revenue generation due to an eventual halt/slump on the sale of

products and/or services. (Priya, 2020)

The need for more revenue in SMEs in the Philippines is clear and expanding after the

said COVID-19 outbreak. According to an SHRM study, 62% of small businesses say they have
experienced a decrease in revenue since the start of Covid-19. Revenue generation, known as

planning, marketing, and selling products, with the ultimate aim of generating income is a crucial

factor in every business to survive this pandemic. (Cognism, 2021) Marketing methods impact

the revenue generation of businesses by how consumers recognize and perceive a brand.

Studying SMEs, in particular, was important to explore in order to identify how retailers

transition consumers into buyers to generate revenue and sustain business survival (Neumann,

2011).

One of the most effective market strategies businesses can choose to generate more

revenues is crafting a brand. A brand makes a product or service distinctive or unique compared

to others in the market. It creates a visual, emotional, and cultural connection between customers

and the business, the product or service, and the type of consumer it attracts. (Kauffman, 2021)

When customers buy your product or service, the experience they receive is what persuades them

to buy from you again. Based on a study by Ewing Marion Kauffman Foundation, the majority

of businesses have successfully created a brand that stands out in customers’ minds. Their brands

have a positive association, a recognized name, and a higher perceived value than their

competitors. These businesses were also proven to have a 31% increase in revenue compared to

other businesses with no branding. (Zvonek, 2018)

The Covid-19 crisis has reinforced what people already know: that brands must

communicate in very local and precise terms, targeting specific consumers based on their

circumstances and what is most relevant to them in order to generate more revenue. (Balis, 2021)

The pandemic also challenged brand loyalty. The EY Future Consumer Index found that up to

61% of consumers, depending on the category, became willing to consider a white label product,

let alone switch name brands. That dynamic coupled with growing consumer awareness and
activism precipitated during the social unrest of 2020 should make brands very focused on the

values they express online.

With most of the population staying at home it is important, wherever possible, for small

businesses to adjust their offerings to help their customers engage with their brand and products

from home. Not only are there fewer opportunities for businesses to reach customers and

potential customers on the streets or in their stores, but customers are also behaving differently

when they do make purchases or hire services. (Barker, 2021) Using paid and organic social

media posts can be extremely effective in promoting these new offerings to current and

prospective customers. Creating a paid advertising campaign on social media platforms such as

Facebook and Instagram nowadays can be highly targeted to reach people within a specific

geographical area, from specific age groups, and with interests relating directly to a company’s

brand that can help generate more revenue to the business.

 Statement of the Problem

Research Questions:

General:

How can online branding be a strategic initiative for SMEs in Tacloban City during the Covid 19

pandemic with regards to revenue generation?

Specific Questions:

1. How effective is branding in increasing the number of followers in their social media

platform/s?

2. How effective is branding in increasing the number of engagements in their social media

post/s?

3. How effective is branding in developing social media resonance with their customers/

potential customers?

4. How effective is branding in increasing their revenues?

5. How valuable is online branding to SMEs?

The development of technology and especially in social platforms brought the surge of

the online shift in consumer behavior. Consumers are now given access to purchases and

payments through the screen of new technology. This, in effect, has brought massive changes in

the business industry. This change in the business industry has prompted businesses to utilize

new and different marketing strategies, usually with established ones. They are competing from

one to another. A common adaptation carried out by businesses is online presence. This strategy
is used not only to establish a presence in the online community. Businesses also use it for their

most important function; to generate sales. Some businesses are taking advantage of this

development and nurturing it as their form of competitive advantage.

The online shift was accelerated when the Covid-19 pandemic befell. Even before the

pandemic, SMEs are already vulnerable in the business environment. Their lack of access to

financial and market information stems from a lack of technological and development

capabilities (Flamiano et al., 2021). The emergence of healthcare protocols and quarantine

restrictions around the country significantly influenced consumer and business activity and

confidence.

As the COVID-19 pandemic’s adverse effects spread through the Philippine economy,

SMEs are facing layoffs and closures in business, attrition of employees, weak growth of small

businesses, and several other problems (Kumar et al., 2021). SMEs struggle to keep their

businesses afloat as they face a drastic decrease in their sales, demand, and, therefore, revenue.

To increase efficiency, and to continue operations, to say the least, SMEs are advised

mainly to increase their revenue generation. Small and medium-sized enterprises, although only

some, understand the importance of online branding. However, they have not maximized the

opportunity to leverage profit generation compared to established businesses. Requiring the

need for initiatives to help SMEs continue their operations during the harsh environment due to

the pandemic, the general business problem points to how online branding can be a strategic
initiative for SMEs in Tacloban City during the COVID-19 pandemic with regard to revenue

generation.

Some SMEs in Tacloban City have not adapted online branding strategies driven by

increasing derivative revenues. According to Cant et al. (2013), SMEs do not fully implement

branding as it does not flow through all their marketing activities and branding is not seen as

essential in running the business. The lack of research that discusses online branding as a

marketing strategy in SMEs could influence SMEs’ lack of acknowledgment of its advantages.

To establish online branding as a strategic initiative for revenue generation, it is essential to

determine the effects of online branding on businesses that implement this kind of marketing and

revenue-generating strategy.

In effect, the specific business problems point to how valuable online branding could be

to SMEs. It involves asking how effective online branding was as a strategic initiative in terms of

the number of followers on businesses’ social media platforms, audience engagement, and

developing their social media resonance. The mentioned factors will be used as indicators in

valuing the benefits of online branding to SMEs.

 Objectives of the Study

Objectives:

General:

To determine strategies for online branding as a marketing initiative for SMEs in Tacloban City

during Covid 19 Pandemic.

Specific Objectives:

1. To determine the profile of the Small and Medium Enterprises (SMEs), in terms of:

1.1 Vision, Mission, Goals, and Objectives

1.2 Number of years/ months in business

1.3 Type of business

1.4 Services/ products offered

1.5 Average capital

1.6 Current digital marketing tools used

2. To determine the number of increase of followers in their social media platform/s.

3. To determine the number of increases face in engagement in their social media post/s.

4. To determine the specific social media platform that garners the most number of

engagements:

a. Followers

b. Likes

c. Shares

d. Views
 e. Sales

5. To determine specific branding strategies used.

6. To determine the change in customers’ social media resonance to the branding strategies

used.

7. To determine the number of revenue increases.

a. The difference between before the pandemic and during the pandemic.

b. The difference between before having online branding and after having online

branding.
 Significance of the Study

The Covid-19 pandemic’s damaging trail spread throughout the globe. It affected the

world economy showing varying effects in each outbreak-affected country. Each country had its

responses against the pandemic, with high-income industrialized countries coping faster than

lesser developing ones.

The pandemic significantly affects the Philippines, one of the recuperating countries with

overdue developments regarding their Covid-19 responses. Coming from its economic recession

in 2020, the country’s resiliency struggles to keep its significant industries afloat. Two years into

its on and off Enhanced Community Quarantines (ECQs), its citizens are forced to find

alternatives to their formerly daily routines. One of the significant changes in the consumer

market is the radical boom of online shopping. Using technological advancements, people are

now getting their tasks and needs to be done through their mobile devices. This online shift and

change in consumer behavior have changed the business industry.

With greater efforts than before, the business industry supplied the demands of the people

during the pandemic. Businesses, either big or small, are affected by the new regulations

implemented by the government in lieu of controlling the spread of the virus. Unfortunately,

SMEs are not particularly favored by the situation. The reason for that is due to the overall

saturation in the competition. Then, to top it with the changes brought by the pandemic, SMEs

are having their most challenging time yet.

Notable establishments invested in the use of online methods to reach and retain

customers. However, because of the lack of means for investing and familiarity, SMEs get left

behind the advantages of technology.

 Businesses and the market environment where it operates have caught the attention of

many literature studies today, especially now that it's one of the most affected sectors in the

pandemic. However, little attention on academic literature was given to the small and

medium-sized enterprises of Tacloban City. There is a need for academic research in Tacloban

City to help sectors such as SMEs continue to operate in a rapidly changing environment amidst

the economic threats posed by the coronavirus disease (COVID-19). Although there has been

academic literature on SMEs in the country and their responses to the pandemic’s financial

turmoil, studies have not yet explored SMEs in Tacloban, which may have different stimuli and

pretexts on their business responses.

Small and medium-sized enterprises understand and incorporate the internet and

technological advances in marketing and communicating their products and services to their

customers. But only a few have sufficiently taken advantage of online branding as a tool and a

fundamental process in reaching a more comprehensive range of audiences which, in effect,

decrease customer turnover, increase brand loyalty, and generate revenues. Effectively leveraging

this initiative would increase SMEs’ online presence and customer engagement. Online brand

management, technology, and internet literacy and awareness are crucial for SMEs to remain

competitive in the rapidly changing market. If SMEs had the same access to technological

know-how and information on marketing trends as large firms, the impact of the pandemic on

SMEs in Tacloban would not have been drastic.

 Scope and Limitation of the Study

This study focuses on the effects of online branding as an initiative of small and

medium-sized enterprise owners to increase revenue and sustainability during the Covid-19

pandemic. Due to the current situation and restrictions in the course of the Covid-19 pandemic,

the data collection will be conducted to selected small and medium-sized enterprises with an

existing branding strategy in Tacloban City only. Although there are other multiple and varied

types of small and medium-sized enterprises in Tacloban City with no existing branding strategy,

they will not be included because their inclusion might affect the analysis and add confusion to

the conduct of the study which may also alter the results of the study. Other variables such as

number of employees employed, their gender, wages, educational background, and their average

monthly costs are excluded due to the lack of time and resources

The study will be done through the utilization of questionnaires prepared by the

researchers for the small and medium-enterprise owners as a survey and reference. Each of the

respondents is given the same questionnaires to answer. Afterward, the researchers will evaluate

and analyze the data collected from the respondents through a chosen assessment procedure by

the researchers.
 Definition of Terms

The following are important concepts and terms that surround the centrality of the study:

1) Business initiative- Internal efforts to enhance a business' work environment, business

culture, or overall business strategy are known as business initiatives. External projects

may be involved in some business initiatives.

2) Consumer Behavior- Consumer behavior is all about figuring out what the customer

wants to buy and why. (Zaichkowsky, Judith Lynne, 1991)

3) Covid-19 - COVID-19 is a disease caused by a new strain of coronavirus. ‘CO’ stands

for corona, ‘VI’ for virus, and ‘D’ for disease. Formerly, this disease was referred to as

‘2019 novel coronavirus’ or ‘2019-nCoV.’ The COVID-19 virus is a new virus linked to

the same family of viruses as Severe Acute Respiratory Syndrome (SARS) and some

types of the common cold (Bender, 2020).

- Most people infected with the virus will experience mild to moderate respiratory

illness and recover without requiring special treatment. However, some will

become seriously ill and require medical attention (WHO, n.d.).

4) Digital marketing - Digital marketing is a form of direct marketing which links

consumers with sellers electronically using interactive technologies like emails, websites,

online forums and newsgroups, interactive television, mobile communications etcetera

(Kotler and Armstrong, 2009).

5) Digital marketing tools- Digital marketing tools are a deconstruction of traditional

marketing tools that have grown in importance by allowing customers and producers in

the marketing process to engage. (F Çizmeci, T Ercan - Megaron, 2015)

6) ECQ - People are restricted from moving unless it is for a need, such as purchasing food.

This restriction does not apply to frontline workers, such as those in the healthcare

industry. Return-to-work guidelines should be followed by the private sector. With the

exception of on-site jobs, employees are to work from home as default.

7) Followers - These are social media users that follow you. These people can see your

posts on their feed and can visit your profile on that social media platform.

8) GCQ - It is a form of community quarantine with moderate and lenient precautions

compared to ECQ. Only up to 75% of the workforce is allowed in government offices

and industries operations.

9) Goals- A goal is a measurable result that is usually broad and long-term in nature. Goals

may be used by a firm to guide annual initiatives that each department will implement.

10) Likes - This is a type of social media engagement. Users can interact with updates and

show that they approve of what has been published through this type of social media

involvement. Likes are available on nearly every major social networking platform.

11) Mission- The current business scope of the corporation is described in a mission

statement. The mission statement outlines the company's goods and services, as well as

the sorts of clients it serves and the company's technological and business skills. A

mission statement is a description of a company's current operations. (Bora et al., Journal

of Entrepreneurship & Organization Management, 2017)

12) Objectives- Each team member must perform precise, quantifiable activities to attain the

overarching aim, which is defined by an objective.

13) Online Branding- How online channels are used to support brands, which in essence are

the sum of the characteristics of a product, service, or organization as perceived and

experienced by a user, customer, or other stakeholders. (Chaffey, 2008)

14) Online market - Online market is the virtual or online setting where buyers and sellers

interact.

15) Revenue Generation - Revenue generation, known as planning, marketing, and selling

products, with the ultimate aim of generating income is a crucial factor in every business

to survive this pandemic. (Cognism, 2021)

16) Shares - This is another form of social media engagement. Social shares or “shares” as it

is commonly called indicate the number of users who shared your content to their

connections, like ‘friends’ on Facebook and ‘followers’ on Instagram and Twitter. the

number of shares of a specific content shows the total reach or how popular your post is.

17) Small and medium-sized enterprises (SME) - Enterprises with fewer than 250

employees (EC, 2003).

18) Social media engagement - Researchers and practitioners have defined engagement in

social media as the action of liking, commenting, and sharing content from brand

(Perreault & Mosconi, 2018).

19) Social media platform - Mediums, such as applications or software, where social media

can be accessed.

20) Social media posts - It is something, particularly content, that has been published by a

user on social media.

21) Social media resonance- Social media resonance refers to an audience's level of

engagement with the material a social media user generates.

22) Social Media- Social media has quickly evolved into a critical communication tool for

the development, diffusion, and consumption of information. As a result of the pandemic,

social media has emerged as the preferred medium for public opinion, views, and

attitudes around COVID-19-related events and public health measures. For governments,

organizations, and colleges, social media has become a critical communication tool for

disseminating critical information to the public. (Shu-Feng Tsao et al., 2021)

23) Views - This another form of social media engagement has two sorts: story view and

video view. Story view is a feature of social media platforms such as Facebook,

Instagram, and Snapchat where your connections can click and view the story you post

on your profile via ‘story’. Video view indicates and shows the number of users who

clicked and viewed your video content一 campaign, advertisement, etc. This feature has

different versions on various social media platforms such as Youtube, Facebook,

Instagram, and such.

24) Vision- In most cases, a vision statement evaluates the company's position and

circumstances five years or more in the future. (Bora et al., Journal of Entrepreneurship

& Organization Management, 2017)